The emerging picture on the Asia-South America trade lane
- By MDS Transmodal
- •
- 18 Jul, 2018
The continued consolidation of the container shipping lines through mergers and acquisitions, along with various vessel-sharing agreements, has had a profound impact on many of the world’s trade lanes.
Prior to April 2018, the Asia-South America west coast trade lane was characterised by four different VSAs, as shown in Table 1
Maersk, the world’s largest container line, operates three services independently from Mediterranean Shipping Co, the 2M’s other member, known as AC1, AC2 and AC3.
Hamburg Süd, which Maersk has now acquired, was part of the multi- carrier ACSA VSA, running three loops operated by APL, CMA CGM, Cosco, Hapag-Lloyd, Mediterranean Shipping Co and Hyundai Merchant Marine. The ACSA VSA deploys the largest vessels with an average capacity of 9,671 teu.
The WSA VSA is made up of five Asian shipping lines: Cosco, Evergreen, PIL, Wan Hai and Yang Ming. It operates two services known as WSA and WSA2. The three Japanese lines — K Line, MOL and NYK — ran their own Asia- South America west coast service known as Andes/Alex.
As shown in Table 1, the ACSA service has the largest deployed capacity of 1.5m teu, followed by Maersk with 1.9m teu. In third place is the WSA, with just over 720,000 teu of deployed capacity followed by Alex with its sole service equating to 337,000 teu.
Since regulatory authorities in China required Hamburg Süd to cease its existing co-operation with rival partners, the German shipping line has, from April 2018, jointly operated four services with its parent company Maersk.
The AC1, AC2 and AC3 services will continue to operate a similar rotation although the transhipment calls at Tauranga, New Zealand, will be dropped. An additional service, the AC5, begins in April, uniquely serving South America’s east and west coasts eastbound only, effectively making it a round the world service via the Panama Canal and the Cape of Good Hope.
Ocean Network Express,
the newly formed carrier launched from the liner arms of K Line, MOL and NYK,
has replaced the world’s third- and fourth- largest shipping lines CMA CGM and
Cosco, in the former ACSA VSA with Hapag-Lloyd, HMM and MSC.
These lines are still operating three services but now under the ONE prefixes of ALX1, ALX2 and ALX3. K Line, MOL and NYK’s standalone Andes/Alex service has been terminated.
The two WSA and WSA2 services remain largely the same, operated by Cosco, Evergreen, PIL, Wan Hai and Yang Ming.
APL and CMA CGM now also join the WSA VSA and combine to operate the WSA4 service, with the remaining group members taking up slots. In addition CMA CGM, Cosco and Evergreen will provide vessels to the new WSA3 service.
As shown in Table 2, the WSA leads the way in terms of deployed capacity with 1.6m teu; in second place Maersk/ Hamburg Süd with over 1.5m teu, followed by ALX, which accounts for over 1.4m teu of deployed capacity.
Comparing charts 1 and 2, we can see that the market shares on the Asia- South America west coast trades are now more evenly spread than in the previous arrangement of March 2018.
With an additional two services the WSA VSA now leads in terms of market share, having been third with 19% prior to the introduction of APL and CMA CGM.
Maersk’s market share by deployed capacity has increased very slightly, by 1%. The ALX grouping lies in third place with a share just 1% below that of second- place Maersk.
The number of VSAs in the Asia-South America west coast trade lane has decreased from four to three, with ONE ending its independent service to team up with Hapag-Lloyd, Hyundai and MSC on the new ALX services.
Conversely, however, the number of services has actually risen, with the WSA VSA now offering an additional two services. Hamburg Süd and Maersk’s AC VSA also add an additional service, although it could be argued that the AC5 loop serves both west and east coasts of South America.
While the number of individual VSAs has reduced and consequently competition declined, the capacity has increased through three additional services, each operating on a weekly basis. With the additional capacity comes the threat of lower rates, which has characterised Asia-Europe and to some extent more recently the transpacific.
It remains to be seen whether this will be the case on the Asia-South America west coast trades over the coming months.